COMPLEMENTARY HUB

Oman 2019 | ENERGY | INTERVIEW

The Duqm Refinery will complement and enlarge the landscape of Oman's energy industry.

Hilal Al Kharusi
BIOGRAPHY
Hilal Al Kharusi is the Acting Executive Managing Director for Oman Oil Duqm Development Company, a subsidiary of Oman Oil Company (OOC). His career spans over 27 years in the energy business. Al Kharusi served as Board Chairman of several energy related companies and currently serves as Chairman of Oman Sustainable Water Services, Vice Chairman in the Duqm Refining & Petrochemical Industries, Board Member in the Special Economic Zone at Duqm, Board Member of Germany’s based OXEA, and member of OOC Executive team. Al Kharusi graduated with a bachelor’s degree in geosciences/economic geography and later obtained an MBA from Henley Management College in the UK.

What impact will the Duqm refinery have on the local and countrywide hydrocarbon industry?

Duqm is well designed to accommodate large-scale industrial projects and further industries, such as downstream, from the refinery project in dedicated special zones for such industries. Refineries tend to create a great deal of economic value through the promotion of accompanying downstream industries. They are not a huge job creator in themselves, though refineries create many downstream industries to support the overall economy of the location, which is what a zone like Duqm is created for and is what Oman looks for. These downstream petrochemical industries will be incentivized to come to Duqm because of its state-of art infrastructure, tax advantages and advanced logistics that are already in place. With Duqm refinery, Oman's refining capacity will increase from 300,000bpd to over 500,000bpd, and the product mix will grow, further enabling large-scale petrochemical and added-value industries, and increasing exports. The Duqm Refinery complements and enlarges the landscape of the energy industry in Oman.

How important is OOC's utilities company, Marafiq, for development in Duqm?

Efficient, well-run utilities are essential for all industries. Investors need access to specific things in any industrial areas, such as utilities, access to ports, storage, and pipelines. Marafiq will provide all the utilities required for our projects in Duqm as well as other projects in the zone. We are working closely with the zone authority to ensure excellent coordination between our projects and zone's infrastructure projects as these projects are being developed at the same time. We are developing a well-integrated system at Ras Markaz Crude Hub, where very large crude carriers (VLCCs) can load and offload crude oil for the refineries. Refined exports are planned through the product terminal at Duqm Port. All investors will have access to this system and can share these infrastructure facilities, which is where the cost efficiencies come in.

What are your plans to export downstream products that will be produced in the coming years?

The refinery has been designed with a capacity of 230,000bpd with product mix based on intensive market studies and the ability to feed world-scale petrochemical projects. The size and configuration of the upcoming petrochemical complex will be designed not to compete but to fill gaps in the petrochemicals product range. The naphtha and LPG from refinery will be initially exported and subsequently processed within Oman to produce petrochemicals when the petrochemical project is commissioned around 2025. We need to plan out further downstream chemicals projects using the petrochemical products and attract Omani private sector to invest in such small and medium projects. We have been approached by many international investors looking for feedstock from the petrochemical project.

Which energy sub sectors will you focus on going forward?

We focus on three areas: growing the upstream exploration and production, developing and integrating the downstream—refining and petrochemicals—and growing the energy infrastructure business, which includes the power sector. In parallel, we are growing our trading activities globally. Downstream, Duqm Petrochemicals complex is expected to be competed by 2025, and there are two projects in Salalah: ammonia and LPG extraction that both are now under construction, and the Liwa Plastic project developed by ORPIC in Sohar and expected to commission in 2019/20. There is growing demand in the power sector and its associated infrastructure, as well as development in renewables, which OOC would like to play an active role in. In infrastructure on the oil side, we are investing in projects related to safe storage, pipelines, and gathering stations. To grow our companies, we need to know how best to position them in terms of market and feedstock access. Further down the road, we have to prepare the next generation of petrochemicals projects, which will be larger and more complex than refineries. We still need to find our niche in the market and the best product mix.